UK Environmental Accounts, 2011 - Blue Book Update

Greenhouse gas emissions intensity, the level of greenhouse gas emissions created per unit of output by the UK economy (excluding households), fell 5.4 per cent between 2008 and 2009. There have been longer term reductions in greenhouse gas emissions intensity in all sectors apart from agriculture, forestry and fishing.

Energy consumption per unit of output (energy intensity) by the non-household sector fell 3.8 per cent between 2008 and 2009. Energy intensity fell between 1995 and 2009 in all industry sectors other than agriculture, forestry and fishing.

The UK’s material productivity increased by 7.2 per cent in 2009, compared with 2008, as domestic material consumption fell more than the GDP.

In 2010, the Government received £42.2 billion from environmental taxes. This represented 8.1 per cent of total taxes and social contributions, the same proportion as the previous year.

What's included in this release ?

The UK Environmental Accounts are published annually in June, with a summary chapter presented in the UK National Accounts 'Blue Book'. As Blue Book was published for the first time this year using the new industrial classifications, SIC2007, this additional update has been produced to take advantage of the latest economic statistics and to present some industry analyses for greenhouse gas emissions and energy consumption. Environmental taxes, environmental protection expenditure and material productivity estimates are also updated. However, this is not a full release of the accounts. Please refer back to the June publication for information on topics including forestry and waste.

A series of short articles is published as part of today's edition. These articles outline developments to the UK Environmental Accounts on issues including natural capital and measuring raw material consumption.

Changes in key environmental and economic measures, 2008-2009

The following chart summarises key indicators from the UK Environmental Accounts, with population and GDP estimates also displayed for context. Comparing 2009 with 2008, greenhouse gas emissions, energy consumption and material use all decreased more than economic output (GDP). The relationships with economic output are explored further in this bulletin.

Percentage change, 2008-2009

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Notes for Changes in key environmental and economic measures, 2008-2009

UK population estimates: Office for National Statistics, National Records of Scotland, Northern Ireland Statistics and Research Agency

GDP: Gross Domestic Product (Chained volume measure)

Greenhouse gas emissions intensity

Greenhouse gas emissions decreased by 21.9 per cent between 1990 and 2009, and by 8.4 per cent in 2009. The fall in emissions in 2009 was greater in the non-household sector (9.6 per cent) than in households (4.0 per cent).

However, the economy was contracting in 2009 and looking at these statistics in isolation does not help in understanding whether any reductions in emissions by the non-household sector are purely the result of reduced economic activity. The level of greenhouse gas emissions created per unit of economic output, also known as emissions intensity, can be used to examine whether this is the case or whether there are indications that levels of emissions are being decoupled from economic growth, and that the economy is on a more sustainable path.

The level of greenhouse gas emissions created per unit of output by the UK economy (excluding households) fell 5.4 per cent in 2009, suggesting the fall in emissions was not only driven by the recession. Examining the longer term trend, emissions intensity decreased by 51.3 per cent between 1990 and 2009. This indicates some decoupling, but a degree of caution should be exercised when interpreting this series as the UK was a net importer of goods during this period, and emissions embedded in the production of these goods are not included.

There have been reductions in the level of greenhouse gas emissions across most sectors between 1995 and 2009 but one of the key drivers of the decrease in emissions intensity has been the switch away from coal to natural gas for electricity generation. The electricity, gas and water supply industries produced 5,200 tonnes of emissions (CO2 equivalent) per million pounds of economic output in 2009, less than half that produced in 1995 (11,400 tonnes).

There has been an increase in the emissions intensity for the agriculture, forestry and fishing industry. Emissions of greenhouse gases have fallen in this sector by 17.7 per cent between 1995 and 2009 but output (gross value added) was down 32.6 per cent over the same period.

Greenhouse gas emissions intensity for selected industries

1995 and 2009

Source: Office for National Statistics

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Comparisons are made with 1995 for the industry analyses of greenhouse gas emissions and energy intensity as this is the earliest year for which economic output (GVA) data are available on an SIC07 basis at the industry level.

Greenhouse gas emissions relate to the primary producer. Emissions are not reallocated to the final consumer.

Output is based on calculations using the chained volume measure of Gross Value Added, the contribution of individual industries to Gross Domestic Product.

Energy intensity

In 2009, total energy consumption of primary fuels (excluding renewable energy) decreased to its lowest level since 1990 (the first year for which records exist), falling 6.9 per cent in the latest year. Energy consumption by households fell 4.2 per cent in 2009 whilst non-household consumption decreased 8.0 per cent.

This is the fourth consecutive year in which energy consumption has decreased. However, the decrease in the most recent year is considerably higher than that of previous years, suggesting that the economic downturn has had an effect on energy consumption.

Examining non-household energy consumption further in relation to economic output, energy intensity decreased by 38.2 per cent between 1990 and 2009, and by 3.8 per cent in 2009. This means that a greater amount of economic output is being produced for each unit of energy consumed in the UK.

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Notes for Energy intensity

Output is based on calculations using the chained volume measure Gross Domestic Product.

Energy intensity for the non-household sector 1995-2009

Energy intensity (energy use per unit of value added) is an indicator for the energy efficiency of industry sectors. Decreases in energy intensity might be explained by more efficient use of energy in production processes or by changes to the structure of the economy.

The consumption of energy can be analysed from a number of different perspectives. Whereas estimates of greenhouse gas emissions are based on the direct consumption of carbon fuels, the breakdown of energy consumption by industry used here is after reallocating 'electricity overheads' to the end user of the electricity.

There have been decreases in energy intensity across most sectors between 1995 and 2009, with an overall decrease of 52.6 per cent for the non-household sector. The biggest fall in energy consumption per unit of output came in the public administration and defence sector (excludes health and education), with a 79.6 per cent decrease. Whilst the sector grew during the period, energy consumption fell by 65.0 per cent, suggesting more efficient energy practices being employed by the sector.

Energy intensity by selected industries

1995 to 2009

Source: Office for National Statistics

Notes:

Output: Gross Value Added Chained Volume Measure

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Notes for Energy intensity for the non-household sector 1995-2009

Comparisons are made with 1995 for the industry analyses of greenhouse gas emissions and energy intensity as this is the earliest year for which economic output (Gross Value Added) data are available on an SIC07 basis at the industry level.

Output is based on calculations using the chained volume measure of Gross Value Added, the contribution of individual industries to Gross Domestic Product.

Energy consumption represents reallocated use of energy where energy industry electricity transformation losses and distribution losses are allocated to the final consumer.

Sources of energy

In 2009, 2.6 per cent of energy consumption in the UK was generated from renewable sources. Approximately 90 per cent of energy consumed was sourced from fossil fuels with the remainder from other sources such as nuclear power and imports of electricity. The use of coal approximately halved between 1990 and 2009 whereas gas consumption increased by approximately two-thirds. The consumption of petroleum and diesel products was broadly unchanged over the period.

Whilst renewable energy sources have become more prevalent, with consumption increasing threefold since 1990, the UK remains heavily reliant on fossil fuels.

Energy consumption by energy source 1990 - 2009

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Material productivity

In 2009, the sum of materials taken from the UK environment for economic use, total domestic extraction, was 458 million tonnes, down 12.5 per cent (66 million tonnes) from 2008.

Direct Material Input (DMI), which also includes imports to the UK, has fallen in every year since 2004 and by 18.3 per cent in total since 1990. It is now at the lowest level since records began (1970).

The largest fall in 2009 was in minerals extraction with a decrease of 51 million tonnes (19.6 per cent) driven by a sharp fall in the extraction of primary aggregates – crushed stone, sand and gravel – as demand was impacted by the economic downturn. The extraction of fossil fuels also fell by 8.5 per cent to 147 million tonnes, largely as a result of lower volumes of natural gas extraction.

In 2009 the mass of imports fell by 3.7 per cent to 268 million tonnes. For the second year in a row imports decreased after five consecutive years of growth with volumes of imports at historically high levels. The fall was mainly driven by reduced imports of minerals (6.4 per cent), biomass (5.6 per cent) and fossil fuels (2.5 per cent).

In 2009 Domestic Material Consumption (DMI less the mass of goods exported from the UK) decreased by 10.8 per cent from 634 million tonnes in 2008 to 566 million tonnes in 2009. Exports in the same period were down by 4.3 per cent (7 million tonnes).

Material productivity has increased between 1990 and 2009. This trend indicates that material use is falling in relation to the level of economic activity in the United Kingdom and supports evidence that domestic material use and economic growth have decoupled since 1990. However, levels of imports have generally risen over the same period suggesting that some of the environmental impacts associated with consumption are being transferred abroad.

The material flow accounts do not currently make any estimate for the raw materials extracted overseas to deliver manufactured and semi-manufactured goods imported to the UK, only accounting for the import in the form that it enters the country. An article prepared by Defra is published today as part of this release to examine the potential for developing a raw material consumption measure to complement the existing accounts.

Material productivity 1990 - 2009

Source: Office for National Statistics

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Environmental taxes

In 2010, the Government received £42.2 billion from environmental taxes. This was £2.7 billion more than in 2009, with the increased receipts mainly coming from duty on petrol and diesel, and the associated VAT on that duty. These accounted for approximately £2.0 billion of the total increase, with the VAT increase partly driven by the rate change in 2010.

In 2010, environmental taxes accounted for 8.1 per cent of total taxes and social contributions, the same proportion as the previous year. Receipts from environmental taxes were equivalent to 2.9 per cent of Gross Domestic Product in 2010, a small increase on the previous year (0.1 percentage points).

When compared with 2000, revenues from the recorded environmental taxes were up 27.3 per cent but the percentage they represented of total taxes and social contributions was down from 9.3 per cent.

Users of these statistics should note, however, that the total for environmental taxes may be slightly understated, particularly for the most recent years as there can be a time lag between the government announcing new transactions and classification decisions being taken on whether they should be treated as taxes in the UK National Accounts. Transactions will only be assessed against the definition of an environmental tax when they are first classified as taxes in the National Accounts. For transparency, each tax is detailed separately in the supporting data tables.

Government revenues from environmental taxes

2000-2010

Source: Office for National Statistics, Energy and Climate Change

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Environmental protection expenditure

In 2009 environmental protection expenditure by the extraction, manufacturing, energy production and water supply industries was estimated as £3.9 billion. The industries spending the greatest amounts on environmental protection were electricity, gas and water supply, accounting for around 68 per cent of expenditure. Possible explanations include the implementation of the Water Framework Directive, implementing findings from the Pitt Review and tighter controls for emissions controls including carbon capture, with expenditure on waste water management accounting for almost half of all monies spent.

Environmental Protection Expenditure by Industry 2009

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Notes for Environmental protection expenditure

This data has large confidence intervals associated with them so the absolute values should be treated with caution.

Background notes

New ONS website

The most efficient way to access the latest UK Environmental Accounts on the new website, including data for download and information on methodology and quality, is via the Environmental Accounts page.

What's new?

Statistics
The environmental data in this release (air emissions, energy consumption etc) is consistent with that published in the UK Environmental Accounts in June 2011. What is new is the economic data which has become available with the publication of the UK National Accounts 2011. Also, the industrial classification of the UK National Accounts is now consistent with the UK Environmental Accounts, using Standard Industrial Classifications 2007 (SIC07).

It has therefore been possible to make available the following analysis:

On 21 December 2011, an article will be published on developments in Environmental Protection Expenditure Accounts, detailing results of engagement with users on the potential applications of these accounts, initial estimates of environmental protection expenditure by the public sector and plans for developing more complete accounts.

The methodology notes which explain how the air emissions and energy accounts are compiled will be updated in December 2011. Work is continuing to further improve these documents, together with all the other methodology notes and these will be made available immediately when completed.

Brief overview of the Environmental Accounts

The Environmental Accounts are ‘satellite accounts’ to the main National Accounts. They provide information on atmospheric emissions, energy consumption, oil and gas reserves, trade in basic materials, waste, environmental taxation and spending on environmental protection. These are related to the different industrial, commercial and domestic sectors. Environmental Accounts use similar concepts and classifications of industries to those employed in the National Accounts, and they reflect the recommended European Union and United Nations framework for developing such accounts. The Environmental Accounts are compiled in accordance with System of Integrated Environmental and Economic Accounting 2003 (SEEA) which closely follows the UN System of National Accounts 1993 (SNA).

Use of the statistics

Environmental accounts provide statistics on the environmental impact of UK economic activity, on the use of resources from the environment in the economy, and on associated taxes and subsidies. There are three dimensions:

natural resource accounts,

physical flow accounts,

monetary accounts.

The environmental accounts are used to make international comparisons of the impact of the economy on the environment. They inform sustainable development policy and will feed into the ONS National Well-being programme that considers environment and sustainability issues as well as the economy and quality of life. They are also used to model impacts of fiscal or monetary measures and to evaluate the environmental performance of different industrial sectors.

To facilitate environmental-economic analyses (for example, examining trends in emissions within the context of economic growth) the Environmental Accounts estimates for atmospheric emissions are published on a National Accounts basis. The definitions therefore differ from those used for reporting under the Kyoto Protocol and United Nations Framework Convention on Climate Change (UNFCCC). The National Accounts measure includes emissions from international aviation and from fuels purchased abroad by UK residents, including those purchased by international shipping and aircraft on international flights. They exclude emissions from fuels purchased in the UK by non-UK residents. Differences between the National Accounts measure and those used for reporting under the UNFCCC, following the guidance of the Intergovernmental Panel on Climate Change (IPCC), are published in the annual UK Environmental Accounts publication.

Similarly, the National Accounts measures of energy consumption differ from those given in the Digest of UK Energy Statistics (DUKES) in a number of respects. These differences and how the measures reconcile are also published with the main annual publication. Further work is planned to improve the transparency of this table.

The material flow accounts are based on information published by HM Revenue and Customs, the British Geological Survey and the Food and Agriculture Organisation of the United Nations. During the compilation process validation checks ensure that published ONS material flows data are consistent with the source data but it should be noted that a snapshot of the data are extracted at a single point in time and so may differ slightly from the latest information available from these sources.

The UK transport sector, as defined on an SIC basis, comprise those enterprises whose dominant activity is the provision of transport services - railways, tubes and trams, buses and coaches, taxis and mini cabs, road freight, air transport, water transport and transport via pipelines. The road freight industry covers road haulage companies as opposed to all types of road freight. Lorries owned by retailers, for instance, are allocated to the retail industry. The use of private cars by households is allocated to the domestic sector.

Summary Quality Reports for air emissions accounts, energy accounts, material flow accounts and environmental taxes can be found in the Quality section of the ONS website.

Work is planned to replace these Summary Quality Reports with Quality and Methodology Information Reports. These will be made available as soon as they are finalised. As well as the four specific accounts outlined above, an overarching report is being prepared for the UK Environmental Accounts.

Accuracy and reliability

ONS atmospheric emissions and energy consumption data are produced by contractors (AEA Energy and Environment) based on the National Atmospheric Emissions and Greenhouse Gas Emissions Inventories and the latest available National Accounts and official statistics sources, for example, supply-use tables. Other elements of the environmental accounts also draw on National Accounts data and administrative sources. Factors impacting the accuracy of the UK Environmental Accounts include the allocation of emissions to industries and the accuracy of emissions factors. Plans have been made to assess the impact of these factors ahead of the publication of the accounts in June 2012.

Revisions

Reliability can partly be estimated by measuring revisions to previously published statistics. Very few statistical revisions arise as a result of ‘errors’ in the popular sense of the word. All estimates, by definition, are subject to statistical ‘error’ but, in this context, the word refers to the uncertainty in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new methodology or the incorporation of new information. Only rarely are there avoidable ‘errors’ such as human or system ‘errors’ and such mistakes are made clear when they are discovered and corrected.

Revisions presented in this publication are minimal as the accounts are only being updated to provide industry analyses and take on the latest economic data. In taking on the National Accounts data consistent with the UK National Accounts 'Blue Book', there have been minor revisions to the environmental taxes for 2010.

Details of the policy governing the release of new data are available from the Media Relations Office. No pre-publication access is given to the contents of this release.

National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

Under the terms of the Open Government Licence and UK Government Licensing Framework, anyone wishing to use or re-use ONS material, whether commercially or privately, may do so freely without a specific application for a licence, subject to the conditions of the OGL and the Framework.

For further information, contact the Office of Public Sector Information, Crown Copyright Licensing and Public Sector Information, Kew, Richmond, Surrey, TW9 4DU.